Saunders v Caerphilly County Borough Council [2015] EWHC 1632 (Ch)

Case No A30CF102[2015] EWHC 1632 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue CARDIFF DISTRICT REGISTRY, Cardiff Civil and Family Justice Centre, 2 Park Street, Cardiff CF10 1ETDate 11/06/2015
Before
HIS HONOUR JUDGE MILWYN JARMAN QC
Between
JOHN RICHARD SAUNDERSClaimantCAERPHILLY COUNTY BOROUGH COUNCILDefendant
Mr Guy Adams (instructed by JCP Solicitors) for claimantMr John Pugh-Smith (instructed by Caerphilly CBC Legal Services) for defendantHearing Hearing dates: 1 and 2 June 2015
JudgmentHH Judge Jarman QC :
[1]The claimant Mr Saunders is the freehold owner of Tyn-y-coed Farm, Maesycymmer, Caerphilly (the farm). As long ago as September 1991 the predecessor of the defendant council as highway authority (I shall refer to both simply as the authority) served upon him notice to treat under a compulsory purchase order in respect of a strip of land (the strip) forming part of the farmland which was needed for the construction of the A469 Lower Rhymney Valley Relief Road. Notice to enter was served in November 1991. Shortly thereafter the authority entered the strip and built the road which has been used as part of the highway network ever since. The road had the effect of severing the main access to the west of the farmhouse and farm buildings. Access is now obtained from the west through an underpass under the road, and informally from the east. The road also severed the drainage system from the farmhouse and farm buildings. Since then, that in respect of the former has been dealt with by means of a discharge into a tank, but there remains no effective drainage from the buildings.[2]The date of entry fixes the assessment of compensation due under the Compulsory Purchase Act 1965, including that in respect of the value of the strip and for severance, disturbance and injurious affection in respect of the remainder of the farm. It is accepted that Mr Saunders has a statutory right to have the price and compensation determined and that the court can grant an order for the determination of those rights. However, over 23 years later final assessment has not taken place. It is common ground that although the parties in 1996 thought they had reached an agreement as to the calculation of compensation, there is no concluded agreement. In essence that is because certain terms of the agreement required the co-operation of third parties.[3]Accordingly Mr Saunders now seeks an order that the authority should refer the matter to the Lands Chamber of the Upper Tribunal (formerly the Lands Tribunal) for assessment and an injunction restraining the authority from using the strip as a road. The authority says that these claims are barred by the Limitation Act 1980. On 18 December 2014 I ordered three issues between the parties to be determined as preliminary issues: i) Whether section 9(1) of the 1980 Act is applicable to the claims made by the Mr Saunders in this action; ii) If section 9(1) is applicable, whether the authority is prevented from raising a defence based on limitation. iii) Whether the claimant’s claim for an injunction preventing use of the road should be struck out under the Civil Procedure Rules 1998 3.4(2)(a) as it discloses no reasonable ground for bringing or defending the claim.[4]Before I deal with those issues I will need to set out in more detail the background facts which are largely agreed. The compulsory purchase order was confirmed by the Secretary of State for Wales on 22 August 1991. The following month the authority gave notice to the claimant that it required to purchase and take the strip for the purposes of and under the provisions of the Highways Act 1980. By paragraph 4 of the notice, it was stated that if after 21 days after service Mr Saunders should fail to give particulars of his claims or the authority should not agree as to the amount of compensation, the authority “will refer the assessment of the amount of such compensation to the Lands Tribunal.” The authority entered the land in November 1991.[5]Mr Saunders instructed a solicitor, a surveyor and eventually counsel to deal with his claim. Particulars were given and meetings were held between the parties, which became protracted. Mr Saunders’ solicitor took the precaution of sending a notice of reference dated 16 January 1996 to the Lands Tribunal under section 5 of the Compensation Act 1961 for compensation in respect of severance, disturbance and injurious affection.[6]By letter dated 19 July 1996 headed without prejudice the authority’s chief property officer set out a number of proposed terms subject to committee approval including a sum of money in full and final settlement and rights of way to be granted by the authority. In that latter respect it was stated “Until negotiations are completed and any title problems resolved completion of these may have to be delayed.” It was also indicated that the authority was to provide a drain between the farm house and main drain and that would be done shortly.[7]The parties solicitors discussed those terms on the telephone on 3 September 1996 and a few days later Mr Saunders’ surveyor wrote to accept them subject to full and satisfactory rights of way being granted. This involved the acquisition by the authority of plots of land in order to grant Mr Saunders a right of way across a dismantled railway line to the east of the farmhouse. The authority’s head of legal services replied on 20 September that subject to approval of the highways committee which was due to meet on 24 September he had instructions to proceed and that the authority would grant “such rights as your client requires as soon as possible after the acquisition of these plots.” The letter ended by referring to the fact that an extension of time granted by the Lands Tribunal had expired and that following the anticipated committee meeting “there will be nothing to prevent your application to the Tribunal being withdrawn.”[8]Such approval was forthcoming and by letter dated 9 October Mr Saunders’ solicitor wrote to the Tribunal saying that a “settlement has now been reached with [the authority] and we are instructed to withdraw the reference to the Tribunal.” The Registrar sought the consent of the authority to the withdrawal and that was given by letter dated 14 October 1996.[9]On 18 October 1996 the head of legal services in a memorandum to the chief engineer suggested that as “the conveyancing process in this matter is likely to be long and protracted” a request by Mr Saunders for an advance payment under section 52 of the Land Compensation Act 1973 in respect of compensation be looked upon favourably “as a matter of urgency.” It took until 14 March 1997 for approval to be given to make a 90% advance payment for the acquisition of the strip. The following week the head of legal services sent to Mr Saunders’ solicitor a statement stating that the payment of £282,843.23 included interest on the total advance payment of £193,500 with effect from the date of entry on 6 November 1991. On 27 March 1997 Mr Saunders signed an acknowledgment and agreement undertaking to repay the advance payment or any difference if it transpired that no compensation was payable or was payable in an amount less than the advance.[10]The process turned out to be even more protracted than anyone envisaged. By 2008 two main issues remained to be resolved, despite efforts by the parties to do so. The first related to drainage and in particular of effluent from the farm buildings as opposed to the farmhouse. The statutory undertaker Dwr Cymru Cyf was not prepared to allow that effluent to be disposed of via the main sewer. Accordingly Mr Saunders could not use the buildings for the purposes of wintering his livestock and put forward what was termed an overwintering claim to deal with the extra costs of keeping his livestock over the winter. The second issue related to rights of way, which also involved ongoing negotiation with Dwr Cymru Cyf.[11]A letter from the head of services to Mr Saunders’s solicitor dated 20 November 2008 referred to these issues and included the following passages:
“Ultimately the overwintering claim forms part of a complete package of terms agreed with your client and as such should be dealt with concurrently and in the absence of agreement will be a matter for the Lands Tribunal.”
There is then a reference to a without prejudice offer in respect of the overwintering claim and the letter continued:
“I can add no more on this point and trust you will urge your clients that commencing proceedings at this stage will serve no useful or productive purpose in progressing the matter.”
The letter ends:
“In view of the significant progress that has been made and in order to maintain the momentum I would suggest we reconvene a meeting, when all outstanding issues can be discussed openly. Subject to you agreeing to this I will make the necessary arrangements at this end.”
[12]Negotiations continued. In September 2009 the authority made a further without prejudice offer and the solicitors continued to correspond in detail on the terms of this offer. Yet a further offer was made in May 2012 in anticipation of resolving the right of way issue. A without prejudice meeting was held on 30 July 2012 at which the drainage issues were discussed at length. It was made clear by and on behalf of Mr Saunders that there must be a workable solution for the farm and reference was made to alternative premises. On behalf of the authority it was said that there was a settlement on the table. Mr Saunders replied that all he wanted since 1992 was to settle but he could not accept the offer then on the table because he needed to ensure he could farm. It was right at the end of that meeting that for the first time it was indicated on behalf of the authority that it reserved the right to raise all issues including whether the claim “is statute barred.”[13]In a letter on behalf of the head of legal and governance the next day it was confirmed that the offer would remain “open for acceptance in full and final settlement” until 6 August 2012 and if not by then accepted would be withdrawn. It was rejected on that day and formally withdrawn on 17 August. The following month Mr Saunders changed solicitors to those presently instructed by him. The authority reiterated to them in October 2012 and in January 2013 that it considered that the claim was statute barred but in March 2012 repeated its offer on a without prejudice basis. The respective solicitors continued to deal in correspondence with amongst other matters the terms offered in respect of the rights of way but these were not acceptable to Mr Saunders. The offer was repeated with an extended period which expired on 30 June 2014. Draft proceedings were sent to the authority in July saying that instructions had been to issue them unless matters could be resolved. There were not, so the present proceedings were issued in October 2014.[14]I turn to the first issue. The following sections of the Limitation Act 1980 are relevant:
“9(1) An action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued. 29(5) Subject to section (6) below, where any right of action has accrued to recover – (a) any debt or other liquidated pecuniary claim….and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment. 36(1) The following time limits under this Act, that is to say….(e) the time limit under section 9 for actions to recover a sum recoverable by virtue of any enactment….shall not apply to any claim for specific performance or a contract or for an injunction or for other equitable relief….”
[15]Before 1997 it was widely assumed that no limitation period applied to claims for compensation in respect of appropriated land until the amount of compensation had been agreed or determined. In June of that year Stanley Burton QC as he then was sitting as a deputy judge of the High Court granted a declaration that such a claim was barred by section 9 even though the amount of compensation had not been agreed or determined. He granted the acquiring authority permission to appeal, which it did. In Hillingdon LBC v ARC Ltd (No 1) [1999] ChD 139 CA, the Court of Appeal upheld that decision. Both parties were represented by counsel highly experienced in the field, and it was not disputed by them that the compensation for compulsory purchase resulting from entry onto land pursuant to section 11 of the Compulsory Purchase Act 1965 was “a sum recoverable by virtue of any enactment” under section 9.[16]Accordingly the issue which the Court of Appeal considered was the date upon which the cause of action accrued. Lord Justice Potter at paragraph 14 noted that whilst none of the statutory provisions expressly confers the right to compensation, such right is to be assumed or inferred from the various references in the 1965 Act to compensation being “paid,” “agreed” or “awarded.”[17]At paragraph 23 he set out a number of propositions which were not in dispute in that case and are not in dispute in the present case. They may be summarised for present purposes as follows: i) The expressions “action” and “cause of action” in section 9 are extremely wide; ii) What may not have amounted to a cause of action for the purposes of the Limitation Act 1623 may none the less be a cause of action for the purposes of section 9 and its predecessor section 2(1)(d) of the Limitation Act 1939; iii) The policy of the Limitation Acts, to prevent stale claims, is equally applicable to claims against public authorities for sums payable by them pursuant to statute; iv) A cause of action may accrue for the purposes of section 9 even though a constituent element of it may have to be determined by someone other than a court of law; v) An action may be for a “sum recoverable by virtue of [an] enactment” even though the liability in question is not and cannot be quantified when the action is commenced.[18]On behalf of the claimant in that case it was submitted that neither individually nor collectively did those propositions overcome the difficulty that the obligation of the authority is only to pay compensation once agreed or assessed by the Tribunal. However, having considered the authorities Potter LJ, with whom the other members of the Court Mummery and Nourse LJJ agreed, said this at paragraph 33:
“I consider that, when the realities of the position are looked at in a case of this kind, the right to compensation which arises as at the date of entry of the acquiring authority is an immediate right which, in the absence of agreement (as to which there is no obligation upon the parties), can only be enforced at the suit of the claimant by initiating proceedings to quantify the sum due; that in turn can only be done by the Lands Tribunal, just as much as it must be done by an arbitrator in other statutory contexts. While the exercise may be simply one of quantification, it is in reality an action to recover a sum of money, namely the amount of compensation due as assessed by the Lands Tribunal.”
[19]There was a further hearing in the High Court in which it was held that the acquiring authority was estopped by convention from relying upon the expiry of the time limit, having regard to ongoing negotiations between the parties. That decision was also appealed and upheld by a differently constituted Court of Appeal (Swinton Thomas and Waller LJJ and Arden J in Hillingdon LBC v ARC Ltd (No 2) [2000] 3 EGLR 97).[20]The earlier Court of Appeal decision was referred to in another case in the Court of Appeal BP Oil UK Ltd v Kent County Council [2003] 3 EGLR 1, in which the parties entered into an agreement providing for accommodation works, the transfer of land and a payment for the loss of the land being “compensation to be agreed but assessed in accordance with the statutory compulsory purchase code” and to be referred to the Lands Tribunal in default of agreement. After such default, a reference was made over six years after entry but within six years of the agreement.[21]The lead judgment was given by Lord Justice Carnwath, as he then was, with whom the other members, Mummery and Kennedy LJJ, agreed. After observing at paragraph 7 that entry under section 11 of the 1965 Act does not give the authority any title to the land, continued; “In some cases, this may not matter very much. For example, in this case, they apparently have been able to use the land as part of the road for a number of years without obtaining full title. In other cases, where, for example, the authority wish to transfer the land to a developer, early acquisition of title may be important. The Compulsory Purchase Acts contain procedures for securing title, even without the co-operation of the vendor, for example by a vesting declaration (under the Compulsory Purchase (Vesting Declarations) Act 1981) or, where the notice to treat procedure is followed, by payment of compensation into court, followed by a deed poll: see section 9 of the Compulsory Purchase Act 1965. Apart from these procedures, the normal pattern will be for the authority to enter following notice to treat and notice of entry, and for compensation to be agreed or determined by the tribunal, following which there is the equivalent of a contract for the sale of land, which can be specifically enforced: see Capital Investments Ltd v Wednesfield Urban District Council [1965] Ch 774, at p794, per Wilberforce J.”[22]In paragraph 10, he saw no reason why the obligation in the agreement to pay by way of consideration an amount calculated in a particular way should not be treated as an enforceable obligation. In the following paragraph, he continued:
“Nor do I find it necessary to decide whether this agreement “supplanted” the rights under the statute. This would become a live issue only if, for some reason, the agreement had ceased to be binding on the parties, for example by frustration. In those circumstances, it might have been necessary to consider whether the parties should be able to revert to their statutory rights.”
[23]Pausing there, it seems to me that the facts of the present case fall somewhere between the situations contemplated respectively in Hillingdon and BP Oil. Here, unlike in the former case, a reference to the Tribunal was made in time. It was withdrawn at the suggestion of and with the consent of the authority because the parties thought they had a concluded agreement. However, unlike the latter case, it turned out that there was no concluded agreement.[24]The principle in Hillingdon has since been applied in the Tribunal and in the courts including the Court of Appeal (see, for example, Bridgestart Properties Limited v London Underground Limited [2005] EWCA Civ 793; [2005] 1P&CR 15). Mr Adams, in advancing his case on behalf of Mr Saunders, does not go as far as to submit that that case was wrongly decided, What he says is that it was a decision on the particular submissions made by counsel, and is not relevant to this claim. Mr Saunders is not seeking to recover any sum recoverable by virtue of any enactment, but rather seeking to enforce the authority’s obligation to purchase the strip.[25]In seeking to make good that submission, Mr Adams referred to a number of what he termed Victorian authorities decided under the Lands Clauses Consolidation Act 1845. That Act, as Potter LJ observed in paragraph 38 of Hillingdon (No), contained “…elaborate provisions for compensation to be set by justices or by arbitration or by jury prior to possession being taken by the acquiring authority. Thus, there was no need for the provision of a limitation period in respect of the right to recover such compensation. It was not until the Acquisition of Land (Authorisation Procedure) Act 1946 that the acquiring authority was able to enter on and take possession of land notwithstanding that the purchase had not been completed. That legislation made no provision in respect of time limits. However, it was passed against the background of the provision of the Limitation Act 1939 and in particular section 2(1)(d) relating to sums recoverable by statute.”[26]Mr Adams submits that it is simply wrong to say that the right to enter before purchase was completed did not arise until 1946, and points to section 85 of the 1845 Act itself which allowed for entry before agreement or award as to the purchase money or compensation. However, the section expressly provided that such power was only to be exercised after the deposit by way of security and the giving of a bond for the payment of the amount of purchase money or compensation claimed. Otherwise, section 84 provided that entry should not be made without the consent of the owner until the purchase money or compensation agreed or awarded to be paid was paid or secured. Section 68 provided that any party entitled to compensation of over £50 for land taken or injuriously affected and for which satisfaction shall not have been made, may have the same settled by arbitration or jury. These provisions in my judgment underline, rather than detract from, Potter LJ’s point that there was no need to provide for a time limit in respect of the right to recover compensation.[27]It is against that background that the authorities relied upon by Mr Adams must be viewed. It is not necessary to recite them all in this judgment, as the principles are not in dispute. In Adams v The London and Blackwall Railway Co (1850) 2 H&TW 285, the Lord Chancellor at page 295 referred to section 68 of the 1845 Act and expressed the view that this remedy was in addition to the right to the old remedy of mandamus to compel the summonsing of a jury. In Fotherby v Metropolitan Railway Co (1866) LR 2 CP 188 and Tiverton and North Devon Railway Co v Loosemore (1844) 9 App Cas 480 at 493 similar references were made to compelling the summonsing of a jury by mandamus. In the latter case, Lord Blackburn said that until the price was ascertained the land still remained the property of the original owner in equity as well as in law.[28]Accordingly Mr Adams submits that the nature of Mr Saunders’ claim is for prerogative relief to require the authority to comply with its statutory obligation to refer the question of the disputed compensation to the Tribunal and is made with a view to seeking the private law remedy of specific performance of the obligation to purchase the strip. Such a claim does not in my judgment fit easily the facts of this case, where Mr Saunders himself referred the matter to the Tribunal but withdrew when the parties thought they had concluded a settlement and where subject to limitation the authority accepts its obligation to purchase the strip. That was made clear in the defence.[29]Mr Pugh-Smith for the authority does not challenge the jurisdiction of the court to compel the use of the present statutory code for the assessment of compensation, although he submits that the proper route is by way of judicial review. However, he also submits that the language of section 9 is wide enough to embrace the claim as presently formulated and that it is artificial to say that Mr Saunders does not seek any recoverable sum.[30]It is clear that the Victorian authorities relied upon by Mr Adams were not referred to the court in Hillingdon. Nevertheless, in my judgment, regard must be had to what Potter LJ in that case described as the realities of the situation, namely that the right to compensation is an immediate right arising upon entry which in the absence of agreement can only be enforced by reference to the Tribunal. In reality, that is an action to recover a sum of money, namely the amount of compensation determined by the Tribunal.[31]Given the extremely wide ambit of section 9, in my judgment it is wide enough to embrace the claims as formulated in this case. In my judgment in reality what Mr Saunders seeks is to recover a sum of money namely the amount of compensation determined by the Tribunal. I determine the first issue in the affirmative, so that section 9 does apply to Mr Saunders’ claim.[32]That leads to the second issue. Mr Adams submits that having regard to a number of factors Mr Saunders has a substantive legitimate expectation that the question of compensation will be referred to the Tribunal notwithstanding the expiry of the time limit. Those factors are: the statement in the notice to treat that the authority would refer any dispute to the Tribunal, the entry onto the strip by the authority, its acknowledgment that substantial compensation would be payable by the advance payment, the liability of Mr Saunders to repay that sum if no compensation is payable and the period over which negotiations continued.[33]In putting the matter on the basis that a court will prevent a public authority relying on its strict rights to defeat a legitimate expectation where to do so would be an abuse of power or an affront to the public conscience, Mr Adams places reliance upon R v North and East Devon Health Authority ex p Coughlan [2001] QB 213 and Anufrijeva v Southwark LBC [2004] 1 AC 604. He also relied upon a passage of Lord Justice Laws in Nadarajah v Secretary of State for the Home Department [2005] All ER (D) 283 (Nov) that where the public interest has to be balanced against a private interest, then if the public interest is to be preferred the response must be proportionate.[34]Mr Pugh-Smith submits that the proper test is whether the authority is estopped from denying that section 9 applies. That was the language used in Hillingdon (No 2), in which Mrs

Justice Arden, as she then was, giving the judgment of the court said at page 104k:

“A shared assumption is not, on the authorities, sufficient to establish an estoppel unless it is communicated. It follows that if, in this case, there was no shared assumption to the effect that ARC would have a valid claim that was not time-barred, there could be no communication by HLB that they were making any assumption. It also follows from what we have said above that the communication required would in any event, be not simply that ARC had a valid claim, but also that HLB would not take any defence that might be open to them on the basis of a statutory limitation period.”
[35]Mr Pugh Smith submits that there was no promise or representation in this case which would debar the authority from now relying on section 9. Mr Saunders was throughout represented by experienced solicitors and at one stage by counsel and was, as he readily accepts, kept fully informed. There is no indication why the matter was not referred back to the Tribunal in 1996 as it could have been under the rules then in force, and no explanation for the delay between 2012 when the issue of whether the claim was time barred was first raised and 2014 when the present claim was issued. He concedes that the six year period to refer back would have commenced in 1996 or at the latest in 1997 when it should have been clear that the settlement was not concluded[36]I find it difficult to see how the indication in the notice to treat can reasonably be taken to communicate that the authority would not take a limitation defence when the notice was served long before the expiry of the six year period even if taken from date of entry. Nor can I see that the advance payment amounted to such a communication when there was express agreement to pay it back if no compensation was payable. However, the invitation by the authority to withdraw the reference on the basis that a settlement had been concluded, must in my judgment be taken at least to communicate that the six year time limit would in effect start from that settlement in order to enforce it, and in my judgment Mr Pugh-Smith’s concession is a proper one.[37]However that communication was on the basis that there was a concluded settlement when it is now common ground that there was not. It is not clear on the evidence when that was or should reasonably have been realised. What is clear is that the parties carried on negotiating to try to resolve the outstanding issues on the basis of the settlement which each party thought had been concluded.[38]The letter from the head of legal services in 2008, in my judgment amounts to clear communication that if matters were not agreed, then they would be referred to the Tribunal. Implicit in that indication in my judgment is that no limitation point would be taken. Not only that, but the authority suggest that the parties should continue to negotiate and that commencing proceedings at that stage would serve no productive purpose. That was the basis upon which negotiations continued until 2012, when the authority for the first time raised the limitation point and reserved its rights in respect of it. Thereafter, in my judgment, Mr Saunders was entitled to a reasonable time to consider his position, and it is perhaps not surprising that he should in those circumstances wish to instruct new solicitors, who would need some time to come to a view as to what had gone on during a period of almost 20 years.[39]Both counsel accepted that in considering whether the authority is now debarred from taken the limitation defence, I should have regard to whether it would be unconscionable in all the circumstances for it now to take the defence. In my judgment having regard to the factors set out in paragraph 38 above, it would be. Mr Pugh-Smith helpfully indicated that if that were the conclusion, then the authority would offer an undertaking to make a reference as soon as practicable, having regard also to the desirably for ADR. Mr Adams also helpfully indicated that Mr Saunders would accept such an undertaking, and in my judgment that is a sensible way forward.[40]In light of that conclusion, it is unnecessary for me to decide the alternative way in which the case of Mr Saunders is put under the second issue, namely that there has been an acknowledgment under section 29 (5) of the Limitation Act 1980. In BP Oil, Carnwath LJ also found it unnecessary to decide that point, but did comment in paragraph 19 that he would need some persuading that a claim to compensation that has yet to be determined by the Tribunal could be regarded as “liquidated.” I do no more than repeat that comment.[41]It also means that strictly it is unnecessary for me to decide the third issue. As the matter of compensation will now be referred to the Tribunal there is no purpose in granting the injunction sought. If I needed to make a determination, I would do so on the basis of Mr Pugh-Smith’s submission that as section 263 (1) of the Highways Act 1980 vests the surface of the road in the authority as highway authority, there is no reasonable ground for bringing that claim.[42]As agreed with counsel, I hand down this judgment in writing with an invitation to the parties to file written submissions within 7 days in respect of any consequential matters which cannot be agreed and I will determine those matters on the basis of such submissions.